BA 101 MIDTERM TEST QUESTIONS AND ANSWERS LATEST
UPDATE
What is unlimited liability risk as it relates to sole propietorship?
Losing your personal assets
Conventional (C) Corporation
a state-chartered legal entity with authority to act and have liability separate from its
owners
In the corporate form of ownership, what is the relationship between the owners
and the management?
The owners do not get involved in the daily management of the business.
General Partnership
a type of partnership in which all partners share equally in both responsibility, liability,
risk, and wealth
Limited Partnership
A partnership in which there is no mutual agency, partners don't share risk/wealth
equally, and there is provision for limited liability for some
Sole Proprietorship
a business owned and managed by a single individual
Limited Liability Company
type of business enterprise that protects members against losing all of their personal
wealth; members are taxed as if they were in a partnership
Corporation
A business owned by stockholders who share in its profits but are not personally
responsible for its debts
B Corporation
a business that explicitly seeks to blend its social objectives with its financial goals
S corporation
A unique government creation that looks like a corporation but is taxed like sole
proprietorships and partnerships
In terms of operating flexibility, what are three things that LLCs are not required
to do?
hold annual meetings
file written resolutions
keep minutes
Merger
Combination of two or more companies into a single firm
Acquisition
When one firm buys another
Common stock
Voting rights (proxy) and residual claims to assets
Preferred Stock
no vote, first claim on income (preferred dividend), first claim on assets after debt is paid
Domestic corporation
, a corporation in the state in which it is incorporated
Foreign corporation
a corporation in any state in which it does business except the one in which it is
incorporated
Alien corporation
a corporation that is organized in one country and operated in another
Franchise agreement
an arrangement whereby someone with a good idea for a business (franchisor) sells the
rights to use the business name and sell a product or service (franchise) to others
(franchisees) in a given territory
Cooperative (co-op)
a business owned and controlled by the people who use it - producers, consumers, or
workers with similar needs who pool their resources for mutual gain
Conlomerate Acquisition
One firm buys another with unrelated business activities
Vertical Acquisition
a firm acquiring a supplier or distributor of one or more of its goods or services
Horizontal Acquisition
the acquisition of a company competing in the same industry as the acquiring firm
Entrepreneurship
Accepting the risk of starting and running a business.
Purposeful Innovation
Innovation is about making a meaningful "contribution" through
•New value
•Different value
•Combining resources in a more productive way
Systematic Innovation
A purposeful and organized search for changes in the environment and then a
systematic analysis of the opportunities that such changes may offer
Intrapreneurship
process of promoting innovation within the structure of an existing organization
Crowdsourcing
the practice of obtaining input or information from a large number of people via the
Internet.
Opportunity Analysis
1. Determine how attractive an industry is overall as a "home" for a new business
2. Identify possible niches a new entrant can occupy profitably
Feasibility Analysis
1. Are customers willing to purchase our goods/services?
2. Can we provide the products/services at a profit?
Financial Feasibility Analysis
Capital requirements
Estimate of start-up capital required to launch
Estimated earnings
UPDATE
What is unlimited liability risk as it relates to sole propietorship?
Losing your personal assets
Conventional (C) Corporation
a state-chartered legal entity with authority to act and have liability separate from its
owners
In the corporate form of ownership, what is the relationship between the owners
and the management?
The owners do not get involved in the daily management of the business.
General Partnership
a type of partnership in which all partners share equally in both responsibility, liability,
risk, and wealth
Limited Partnership
A partnership in which there is no mutual agency, partners don't share risk/wealth
equally, and there is provision for limited liability for some
Sole Proprietorship
a business owned and managed by a single individual
Limited Liability Company
type of business enterprise that protects members against losing all of their personal
wealth; members are taxed as if they were in a partnership
Corporation
A business owned by stockholders who share in its profits but are not personally
responsible for its debts
B Corporation
a business that explicitly seeks to blend its social objectives with its financial goals
S corporation
A unique government creation that looks like a corporation but is taxed like sole
proprietorships and partnerships
In terms of operating flexibility, what are three things that LLCs are not required
to do?
hold annual meetings
file written resolutions
keep minutes
Merger
Combination of two or more companies into a single firm
Acquisition
When one firm buys another
Common stock
Voting rights (proxy) and residual claims to assets
Preferred Stock
no vote, first claim on income (preferred dividend), first claim on assets after debt is paid
Domestic corporation
, a corporation in the state in which it is incorporated
Foreign corporation
a corporation in any state in which it does business except the one in which it is
incorporated
Alien corporation
a corporation that is organized in one country and operated in another
Franchise agreement
an arrangement whereby someone with a good idea for a business (franchisor) sells the
rights to use the business name and sell a product or service (franchise) to others
(franchisees) in a given territory
Cooperative (co-op)
a business owned and controlled by the people who use it - producers, consumers, or
workers with similar needs who pool their resources for mutual gain
Conlomerate Acquisition
One firm buys another with unrelated business activities
Vertical Acquisition
a firm acquiring a supplier or distributor of one or more of its goods or services
Horizontal Acquisition
the acquisition of a company competing in the same industry as the acquiring firm
Entrepreneurship
Accepting the risk of starting and running a business.
Purposeful Innovation
Innovation is about making a meaningful "contribution" through
•New value
•Different value
•Combining resources in a more productive way
Systematic Innovation
A purposeful and organized search for changes in the environment and then a
systematic analysis of the opportunities that such changes may offer
Intrapreneurship
process of promoting innovation within the structure of an existing organization
Crowdsourcing
the practice of obtaining input or information from a large number of people via the
Internet.
Opportunity Analysis
1. Determine how attractive an industry is overall as a "home" for a new business
2. Identify possible niches a new entrant can occupy profitably
Feasibility Analysis
1. Are customers willing to purchase our goods/services?
2. Can we provide the products/services at a profit?
Financial Feasibility Analysis
Capital requirements
Estimate of start-up capital required to launch
Estimated earnings
